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The Honolulu Advertiser
Posted on: Thursday, July 8, 2004

Health insurer files rate plan for Hawai'i

By Deborah Adamson
Advertiser Staff Writer

Summerlin Life & Health Insurance Co., the first health insurer to enter the Hawai'i market in at least a decade, has filed its rate plan with the state.

The filing submitted Tuesday is the last step for the Las Vegas-based health insurer before it can do business in the state. Hawai'i's Insurance Commissioner has 60 days to rule on the plan. If the rate filing is approved, the company says it plans to market its health plans beginning in the third quarter. The state did not disclose the rates Summerlin would like to charge.

Summerlin initially will introduce three plans for businesses — two comprehensive health plans and a preferred provider organization, or PPO, plan.

Later, Summerlin expects to roll out a plan for individuals and one specifically for children.

Summerlin is owned by I/MX Companies in Tempe, Ariz., and covers clients in Illinois, Iowa and Nevada.

"Consumers will now have some added choices," said Paul Tom, president of Honolulu-based Benefit Plan Consultants and chairman of the state's Prepaid Health Care Advisory Council. But "how much of an impact they will have, I don't know."

Hawai'i's health insurance market is dominated by the Hawai'i Medical Service Association, or HMSA, which has more than 60 percent of the industry, said Insurance Commissioner J.P. Schmidt. Kaiser Permanente holds another 25 percent and the rest is taken by the Hawaii Management Alliance Association and University Health Alliance.

The entry of Summerlin "will be very good," Schmidt said. "It's one of the things we feel that's important — that is to provide competition, especially in health insurance. It is a very concentrated market."

In the mid-1990s, Hawai'i had as many as 10 health insurers. But many couldn't compete because nonprofit insurers dropped their prices low enough to make it hard for newcomers to gain market share, Tom said.

Travelers and Aetna had a tougher time because they paid the state's 4.265 percent tax levied on for-profit health insurers. Summerlin faces the same problem because a bill to waive the tax didn't make it through the Legislature in April.

At least Summerlin doesn't have to contend with the non-profit insurers dropping their rates to drive it out, Tom said.

Since the state began regulating health insurance premiums in 2003, insurers must get approval for their rates. They cannot charge low premiums that effectively would keep out competition, he said. Before state oversight, insurers could charge any premiums they wished.

"Today's playing field is much more level with the oversight law," Tom said.

Mona Tracy, a retiree living in Mililani who pays for her own health insurance, is eager to see Summerlin go head-to-head with HMSA and Kaiser.

"We'll have more competition," she said. "That's what we need."

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.